Globally, there is ample wheat at prices as low as $200 (Rs 13,600) per tonne free on board that can be accessed by both the government and private trade.Madhvi Sally | ET Bureau | February 16, 2016, 12:23 IST

The food ministry aims to procure 30 million tonnes to build buffer stocks and to supply under welfare schemes.NEW DELHI: Ample global supplies are likely to check wheat prices in India in the short term despite local production estimates remaining modest and the government targeting to procure as much as a third of the projected output, traders said.

The agriculture ministry expects production this year to total 93.82 million tonnes, compared with last year’s 86.53 million tonnes. The food ministry aims to procure 30 million tonnes to build buffer stocks and to supply under welfare schemes. Private estimates on production are lower.

Globally, there is ample wheat at prices as low as $200 (Rs 13,600) per tonne free on board that can be accessed by both the government and private trade, said grain analyst Tejinder Narang. “There is, for sure, a substantial decline in output of wheat this year from a high of 95 million tonnes two years back. As per the market view, the wheat production will close to about 82-83 million tonnes, provided weather conditions are stable,” said Narang, who expects the market situation on wheat to remain fluid until July. A Delhi-based trader from SMC Comtrade said not much trade was happening in wheat futures.

“Prices should remain stable at Rs 1,520 a quintal, but if an upswing comes, it can be in the range of Rs 1,590 to Rs 1,610,” said Subhranil Dey. Companies and analyst said apart from domestic wheat production, the market was keenly watching government stance on the removal of the 25% import duty on the grain. The CNF prices for Australian premium white wheat is around $230 a tonne, which roughly translates to Rs 18,500 landed cost at mills in India.

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